Lusaka, 24th November 2021: Social Security is the protection that a society provides to individuals and households to ensure access to health care and guarantee income security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity or loss of a breadwinner. According to the International Labour Organization (ILO) Conventions and United Nations (UN) instruments, social security protection is defined as a basic human right. On a global level however, only 20 percent of the world’s population has adequate social security coverage, while more than half, lacks any kind of social security protection at all.
Currently, Zambia’s legal provisions on social security mostly cover the formal economy with mechanisms developed on a “formal employment” model, with predictable monthly earnings, and a stable and clear employment relationship. To date, however, the majority of the Zambian population do not have access to any form of social security as they earn their living from informal employment. To this effect, over 68 percent of the Zambian workforce is in the informal sector which calls for more efforts for some businesses to formalize their operations. The advantage of this step will be two-fold as such businesses benefit from existing social security mechanisms while the country gains from enhanced collection of taxes. On the other hand, workers on the outer layer of the informal sector such as domestic workers require for such an extension of social security. Efforts so far made by the National Pension Scheme Authority (NAPSA) to register domestic workers through their online platform eNAPSA for social security leaves much to be desired in terms of effectiveness and coverage.
Challenges to extend social security to the informal economy include irregular employment arrangements and income patterns, gaps in the legal framework, affordability to subscribe on the workers side, and cost compliance and financial constraints on the employers’ side. Furthermore, poor knowledge on social security rights and requirements, weak workers representation due to the absence of workers organizations, and weak enforcement mechanisms. Therefore, the existing social security scheme features and mechanisms in Zambia are not adapted for the extension of coverage to the informally employed workers.
In view of the aforementioned, ZTP recommends the development of progressive mechanisms that enhance and extend social security coverage to the informal workers. A universal, national, government led approach to delivering social security to informal economy workers is needed, as opposed to unsystematic, decentralized and fragmented solutions. Not only does this allow for broader risk pooling, and solidarity mechanisms across the workforce and society, but also reinforces a right-based approach to social protection where the state is the ultimate guarantor of the social security system. Thus, a holistic and national model that can be adapted to different groups in the informal sector should be formulated to encompass diverse employment arrangements and income patterns that may not be compatible with a single model. It is essential to tailor approaches, design specific product features and develop specific processes for all employment types including the self-employed, casual workers, domestic workers, and where necessary by sector.
The social security landscape in Zambia however, remains predominantly of a social insurance model limited to the provision of protection against loss or reduction of income resulting from retirement, disability and survivorship. This coverage basically encompasses 5 Statutory Schemes:
- Public Service Pension Fund (PSPF) – The Public Service Pension Act No.35 of 1996 governs the PSPF. The Fund covers employees in the public service including the teaching service and defense forces. The Fund is designed to provide income security in the event of retirement, permanent invalidity and survivorship. Apart from paying pensions and gratuity (lump sums) to retirees, the Fund acts as a paying agent for the government with regard to death and early retirement cases. The Fund therefore relies entirely on the government to clear the latter.
- National Pension Scheme Authority (NAPSA) – The National Pension Scheme (NPS) Act of 1996 governs the National Pension Scheme Authority. The scheme aims at affording the workers protection from social hazards by providing them with benefits at the time of retirement to provide income in old age. The scheme also assists the worker with a benefit in the event of physical or mental disability due to permanent illness or mental disturbances which may deny regular employment.
- Local Authorities Superannuation Fund (LASF) – The Fund was created under the Government Notice No.314 of 1954 and covers employees of the local authorities prior to February 1, 2000. The Fund is designed to provide income security in the event of retirement, permanent invalidity and survivorship. The LASF CAP 284 of the Laws of Zambia governs the operations of this Fund.
- Workers Compensation Fund Control Board (WCFCB) – This provides employment injury protection to all private and public sector workers except permanent civil servants, teachers, police and the armed forces. The rates of contributions to the fund vary according to industries. The fund caters for pension benefits, the survivors’ benefits paid to widows and guardians, and temporal periodic payments are made to individuals as they undergo treatment. The Workers Compensation Act No. 10 of 1999 governs the WCFCB.
- Pension and Insurance Authority (PIA) – This is the regulatory and supervisory authority for the pensions and insurance industry in Zambia. It is created by the Pensions Scheme regulation Act No. 28 of 1996 (as amended by Act No. 27 of 2005).
Notably, these Statutory Schemes have been in existence over time but by virtue of only targeting the formal sector, makes them regressive.
Ellen Makinishi (Ms)
Private Sector Enhancement Expert